The Morrison Government has today passed through the Parliament the Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022, which establishes a cyclone and related flood damage reinsurance pool to improve insurance affordability in cyclone-prone areas.
The legislation delivers on the Government’s commitment to establish a reinsurance pool by 1 July 2022 that will support and protect people in northern Australia. By passing this critical legislation today, we are following through on our promise to maximise northern Australia’s potential and to ensure Australians in cyclone-prone areas can access affordable insurance.
More than 880,000 residential, strata and small business property insurance policies in northern Australia are expected to be covered for the risk of cyclone and related flood damage through the establishment of the reinsurance pool.
By delivering the reinsurance pool, the Government expects to see reduced insurance premiums by up to $2.9 billion for eligible household, strata and small business insurance policies. Homeowners in northern Australia with the most acute cost pressures are expected to benefit from up to 46 per cent premium discounts, strata properties up to a 58 per cent discount and SMEs up to a 34 per cent discount.
It is also expected to encourage greater insurer participation in the northern Australian market, thereby increasing competition and putting downward pressure on premiums.
The reinsurance pool will be backed by a $10 billion Government guarantee. The Bill establishes a framework for the Australian Reinsurance Pool Corporation to administer the pool from 1 July 2022, who will now finalise implementation arrangements.
The Government has listened to feedback from Australians who live and work in the north of the country and has made key changes to ensure the reinsurance pool delivers on its objectives.
The Bill and explanatory material are available on the Parliament of Australia website.
Through the reinsurance pool, the Morrison Government is maximising northern Australia’s potential and ensuring Australians in cyclone-prone areas have access to affordable insurance.